The real reason Iain Duncan Smith resigned and what it means for George Osborne and David Cameron

The many Left-wing politicians and activists celebrating his resignation will never believe it, but Iain Duncan Smith was entirely sincere in his commitment to welfare reform. He genuinely believed that his policies were in the best interests of the poor and vulnerable they affected, seeking to help them away from degrading dependence on the state and, where possible, into the dignity and independence of work.

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Mr Duncan Smith's account of "indefensible" welfare cuts made for political not economic reasons deserves the description "explosive" being attached to it.

The letter rings loudly with Mr Duncan Smith's sincere and passionate beliefs. But it cannot be taken at face value and inevitably it does not tell the whole truth, alluding to some of the factors in this genuinely surprising decision to quit and wholly omitting others.

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It is quite true that almost every Budget in recent years has been seen tension between Mr Duncan Smith and senior colleagues, and George Osborne in particular. Mr Duncan Smith's explicit reference to the Chancellor in his letter denotes what was one of the most strained relationships in the Cabinet, both institutionally and personally.

The Chancellor and his Treasury have been the driving force behind cutting welfare spending, for reasons both economic and political. Seeking to cut overall spending significantly while protecting large items like the NHS and the state pension meant there was no alternative but to cut benefits. But Mr Osborne has often sought to make political virtue of that economic necessity, portraying cuts as the work of a party that supports workers and punishes shirkers.

That rhetoric has long angered Mr Duncan Smith, who seeks a more compassionate attitude towards claimants and saw the Chancellor's stance on welfare as cynical and callous.

Never write off Mr Osborne, who is more resilient and persistent than is sometimes acknowledged. But to ascend from this darkest of valleys to the high peak of the premiership would be nothing short of heroic.

He also felt personally insulted. Mr Osborne is a clever man with clever officials and clever aides. He thinks Mr Duncan Smith is stupid, too stupid to implement ambitious and complex projects like the Universal Credit welfare simplification programme, which has again and again missed targets and deadlines. Treasury staff likewise condescend to the Department of Work and Pensions.

Such is Mr Duncan Smith's anger (and his temper runs volcanically hot) at Mr Osborne, he has come close to quitting several times in recent years, most recently over cuts to the budget for Universal Credit. But each time he let the rage pass and decided to stay to get on with what he increasingly saw as his life's work.

His resignation follows an established pattern of events (cuts demanded, tension with the Treasury, IDS fury) with a different outcome. What changed? Why quit over these cuts not earlier ones?

To some, including angry No 10 insiders, Mr Duncan Smith's resignation is nothing more than a move in the EU referendum game. He wants to leave the EU and will do anything to harm a Prime Minister who wants to remain in, they suggest. The welfare row is just a figleaf for that aim, they suggest.

The truth is more complex and, for Conservatives, more worrying.

Mr Duncan Smith's resignation was caused by the referendum, but not directly. His decision was not as simplistic as it's painted by No 10.

The referendum has created a poisonous atmosphere within government. While David Cameron has said he will tolerate colleagues dissenting from his EU policy, ministers who back leaving do not feel tolerated. They feel marginalised and abused by No 10 and No 11. Many have been taken aback by the hostility shown to them by their party's leadership over their decision to back a Brexit that is desired by half the party's MPs and most of its members.

For the Chancellor, this caps the worst week of his political career.

The rancour of the EU debate was central to Mr Duncan Smith's decision. He believed that if Mr Cameron wins the referendum and keeps his job, he would quickly sack the welfare secretary who defied him on Europe. He thus saw no point in restraining his anger over welfare this time.

If his departure advances the campaign to Leave by creating turmoil in Mr Cameron's government, so be it. That is something Mr Duncan Smith will lose little sleep over. And if Britain does vote to leave, perhaps our next Prime Minister will allow Mr Duncan Smith to resume his life's work at welfare.

In the meantime, where does this leave Mr Cameron and Mr Osborne?

For the Chancellor, this caps the worst week of his political career. His Budget had already done grave harm to his faltering bid to succeed Mr Cameron. MPs who were already questioning his judgement over missteps like tax credits believed a package of welfare cuts and tax cuts for the middle-class had been badly mis-sold, a major problem for a chancellor whose advocates insist he is the most politically astute and tactically competent minister of his generation.

Now, instead of looking like the grandmaster of the political chessboard, Mr Osborne risks seeing his greatest gambits turned against him. More than any other, Mr Osborne has driven the narrative that austerity in the public finances and the policies that resulted from it were economically necessary and thus politically beneficial to their Conservative authors. Mr Duncan Smith's attack on that judgement is an attack on the central plank of Mr Osborne's claim to leadership, a claim that has never looked more tenuous than it does today.

Never write off Mr Osborne, who is more resilient and persistent than is sometimes acknowledged. But to ascend from this darkest of valleys to the high peak of the premiership would be nothing short of heroic.

And Mr Cameron? The man who came to the Conservative leadership promising to end his party's fractious obsession with Europe and end the toxic perception of Tories as the party of the heartless rich now presides over a government violently split over Europe and accused by his own welfare secretary as unnecessarily and ideologically cruel to the poor and disabled.

The Prime Minister has already done things that will underpin his eventual legacy: winning the Scottish independence referendum and the general election. But history's verdict on his management of his party hangs in the balance, even before the result of his EU referendum unleashes and formalises divisions in the party that could just prove fundamental and irreconcilable. IDS, for one, clearly has little faith in the party's hopes for post-referendum reconciliation.

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There are two lessons Conservatives should draw from the seismic shock of Iain Duncan Smith's resignation. First, never underestimate the power of Conservative history. The "nasty party" of heartless cuts still stands close by in the imagination of some voters, if not in actuality. Closing the gap between the Tories' image and reality ("detoxifying the brand") is work still far from complete and surely necessary if the party is ever to make a politically viable case for a smaller and reformed welfare state.

Europe too has lost none of its destructive potential for Tories. Unless both sides in the party's referendum battle find a way to conduct their dispute with civility and respect, party unity - and thus coherent government - will be impossible. Most important of all is a way to heal wounds after the vote. Tories on both sides must be confident they can have a place at the top of the party whichever side wins the referendum. Mr Cameron's uncharacteristically ungracious response to Mr Duncan Smith does not bode well here, however.

The second lesson is even on the darkest days, be grateful for good fortune and remember that things could always be worse. The last time a Tory government was tearing itself apart over Europe (Mr Duncan Smith centrally involved as a Maastricht rebel) and facing allegations of dogmatic cruelty, the Labour Party chose as its leader a telegenic young centrist and launched a crusade to win over middle England. Tories reeling from the impact of Iain Duncan Smith's genuinely shocking resignation should go down on their knees and give thanks for Jeremy Corbyn.